Energy Storage

We, that’s all of us on this planet, buy every year 1.6 billion smartphones. It works out to one new smartphone every year for every four living human beings on this planet. Cumulatively, we own and use 4 billion smartphones around the world. Every region of the world, rich or poor, is buying smartphones. Many developing nations in the Middle East, Africa, and Asia are growing their smartphone subscriptions at a fast rate. Ericsson reports that by 2021, there will be 6.3 billion smartphone subscriptions, that’s nearly every man, woman and child around the world. Impressive!

Of course, each and every one of these smartphones has a battery in it. Your first reaction is: “that’s a lot of batteries.” Yes, that is true. Sadly, many of these batteries go to landfills after they are exhausted. The easiest way to gauge the size of the market for batteries is to calculate the entire energy supplied by all of them. Of course, that is a large number. It is measured in billions of watt-hours, abbreviated as GWh. As a reference mark, the battery in a top of the line Tesla S is 100 kWh. One GWh = 1 million kWh = 10,000 Tesla S.

In 2016, the battery factories around the world manufactured about 50 GWh worth of batteries for consumer devices. That drives an industry and a market worth in excess of $10 billions annually. Forecasts indicate that the consumer market will use about 65 to 70 GWh worth of batteries in 2020. Our appetite for more batteries is insatiable and the numbers show it.

Now let’s look at batteries in electrified vehicles, including both hybrid plug-in cars and pure electric cars (xEVs). This is a relatively new market. The Tesla S first came in 2012. The Nissan Leaf came a little earlier in 2011. Many states in the US or countries around the world haven’t yet experienced or experimented with such vehicles. In 2016, all of these vehicles accounted for a mere 0.9% of all car sales. In total, they amounted to less than 1 m vehicles in 2016.

However, in battery lingo, these cars accounted for an increasingly large number of GWh. The year 2016 was the first year that the battery capacity used in xEVs equalled that of all consumer devices, about 50 GWh. By 2020, xEVs will account for ⅔ of all battery production in the world. No wonder Elon Musk and the major car makers pay a lot of attention to their supply chain, including building these Gigafactories.

Tesla Motors announced today upgraded versions of the Model S and X boasting 100 kWh battery packs, up from 90 kWh used in their earlier top-of-the-line electric vehicles. One hundred kilowatt-hours sounds like a lot, and it is, but I bet that many readers don’t have an intuitive sense of this amount of energy. This is what this post is for.

First, a kilowatt-hour is a unit of energy, not power, and is most commonly used in electricity. To put it in perspective, an average home in California consumes about 20 kWh of electrical energy per day, so this 100-kWh fully-charged Tesla battery would cover this home’s needs for about 5 days. Now that’s great if you like to go off-grid.

A Nissan Leaf has a battery with a capacity of 30 kWh and has a driving range of approximately 107 miles (172 km). If the Nissan Leaf were to have its battery upgraded to 100 kWh, then its range would increase to 350 miles, or about what you get from your average gasoline-engine car. That would be real nice!

100kWh is also equal to 341,000 Btu, that is if you like to use the British system of units. At about 10,000 Btu to run a home-sized air conditioning unit, this battery will provide you 34 hours of uninterrupted cool air. It it also equal to 3.4 US Therms (each Therm is equal to 100 cubic feet of natural gas), sufficient to heat a California home in the winter for about 4 days.

Now let’s get a little more creative in this comparison exercise. This high amount of energy can be quite explosive if not designed and operated properly and safely; 100 kWh is the same amount of energy delivered in 86 kg (190 lbs) of TNT….enough to level an entire building.

On a more cheerful note, this battery packs the equivalent energy of 86,000 kilocalories, or what an average human consumes in food over 43 days!

Yet as big as this figure sounds, and it is big, only 3 gallons of gasoline (11 liters) pack the same amount of energy. Whereas the Tesla battery weighs about 1300 lbs (590 kg), 3 gallons of gasoline weigh a mere 18 lbs (8 kg). This illustrates the concept of energy density: a lithium-ion battery is 74X less dense than gasoline.

As I pondered over the past couple of weeks what might be a befitting topic for this 100th post, a group at MIT announced that they discovered how to make batteries with double the energy. Of course, the operative word in the press release was “first-prototype” which means that it might be a long while before, that is if, we see commercial deployment. However this announcement was the catalyst to focus this post on the state of the lithium-ion battery: In other words, if we ignored future inventions, what is the best that we can expect from the lithium-ion battery today across a number of applications.

For the vast majority of modern applications, the lithium-ion battery is capable of delivering the requisite performance. So if you are wondering why is it that most users complain about the battery, I will use an analogy of a jigsaw puzzle. The solution to storing electrical energy involves many pieces, like the pieces of a jigsaw puzzle. These pieces include the battery materials, chemistry and design, which is often provided by one party: the battery manufacturer. But also a critical piece includes the power management of the device and system, in particular the electronics and software needed to monitor how the energy is efficiently used, say by the apps on your smartphone. An equally critical piece is the battery management intelligence, which is what we do here at Qnovo, that is responsible for the integrity and efficient operation of the battery. If water use is to represent energy use, then the battery is the reservoir; power management is akin to water conservation, something we, Californians, are familiar with; and battery management is ensuring the integrity of the reservoir and its contents, making it large and free of toxins.

Separately and individually, each piece of the jigsaw puzzle is today at an exceptional state of the art for consumer electronics, energy storage, and electric vehicles. For example, energy density of batteries in commercial deployment is already near or at 700 Wh/l. This energy density is sufficient to power smartphones comfortably for a full day of use, or power an electric vehicle for 300 miles. Power management has become quite sophisticated, especially in consumer electronics where now the operating systems, e.g., Android OS and iOS, are asserting clever decisions on how apps may use power. Battery management intelligence has also become quite sophisticated, peering deep into the battery in real time and ensuring its continued health and integrity under extreme operating conditions.

But now imagine for a moment trying to build a jigsaw puzzle where multiple players share in putting the puzzle together, or worse yet, each player owns a subset of the puzzle pieces, but not all the pieces. Now you can imagine that putting the puzzle together can get quite complicated. You see, battery vendors know how to build the battery itself but tend to be quite novices in power management and battery management intelligence. System integrators and OEMs tend to have plenty of experience in power management but their knowledge of the battery chemistry tends to be limited. As to battery management, both battery vendors and OEMs have historically under-estimated its need and are playing catch up.

This, for example, begins to explain why Tesla Motors wants to own all these three pieces of the puzzle, beginning with their widely discussed Gigafactory but also their less-advertised efforts in power management and battery management. Apple is also in the same league. While Apple does not manufacture their own batteries, it is widely known that Apple does design their own batteries as well as having growing expertise in both power and battery management. But these tend to be early adopters who have recognized that they need to lead in owning and putting the pieces of the puzzle together. There are other giants who are in need of playing catch up, and they include the likes of Google, Microsoft, Facebook…as well as industrial players who are eyeing batteries for stationary energy storage and electric vehicles. Gradually, they are all beginning to make power and battery management integral to their long-term strategies.

Historically, system integrators and OEMs treated the battery as yet another component they source from suppliers, like the display or other electrical or mechanical components. But this model of outsourcing the battery expertise is beginning to fray. First, battery vendors are hitting the limits of materials and are struggling to meet the increasing demands of their customers without the use of intelligent power and battery management algorithms. Second, there is a growing discomfort, and I might dare say mistrust, between the OEMs and system integrators on one side, and the battery vendors on the other. Third, with the advent of cheap, meaning both inexpensive and lower quality, batteries form China, the business model of the traditional battery vendors, in particular Sony Energy, Samsung SDI, LG Chem is under pressure. A quick evaluation of their financials is sufficient to show they are not healthy. Sony recently announced the sale of their battery business to Murata Manufacturing. These shifting dynamics complicate the necessary tasks required to put together this battery puzzle and are forcing participating companies to seek different alliances. For example, see the growing alliance between Tesla and Panasonic as well as between GM and LG Chem. In China, witness the growing influence of BYD in making batteries and making electric vehicles. The result is that the optimal battery system that incorporates the right battery, right power management intelligence, and right battery management intelligence is accessible to limited few organizations that either have the means to be vertically integrated or put together the necessary alliances.

As the reader can gather, the challenges in offering a great battery experience is really not technical in nature, but rather have economic and organizational origins. For consumer applications, the technology already exists to build elegant smartphones with battery capacities in excess of 3,000 mAh, charging very fast at 1 to 1.5C, and lasting 800 to 1,000 cycles. These specifications give the average consumer an excellent overall battery experience. For energy storage, the challenge is not the battery chemistry but rather hitting the right price points and building out comfort in the specifications from extensive testing. For electric vehicles, the cost of the battery is rapidly dropping. The Chevy Bolt and the promised Tesla Model 3 are prime examples of vehicles targeting the broader population at an increasingly affordable price. That is not to say that engineering innovations and continued disciplined product improvements are not necessary; they are important. But the perception that the battery industry is in dire need of a large breakthrough in technology and materials is not well founded. Instead, there is a bigger need for all the players around the battery jigsaw to learn to work together and leverage each other’s expertise and technologies. This is happening; in the process, we will continue to see a race to build up intellectual property, patent ownership, expertise, and skills by the various participants.

I will jump ahead in this post to discuss the merits of different lithium-ion chemistries and their suitability to energy storage systems (ESS) applications. Naturally, this assumes that lithium-ion batteries in general are among the best suited technologies for ESS. Some might take issue with this point — and there are some merits for such a discussion that I shall leave to a future post.

Made of two electrodes, the anode and the cathode, it is the choice of the cathode material that determines several key electrical attributes of the lithium-ion battery, in particular energy density, safety, longevity (cycle life) and cost. The most commonly used cathode materials are Li cobalt oxide (known as LCO), Li nickel cobalt aluminum (NCA), Li nickel manganese (NCM), Li iron phosphate (LFP) and Li manganese nickel oxide (LMNO).

LCO is by far the most common being the choice for consumer devices from smartphones to PCs. It is widely manufactured across Asian battery factories and the supply chain is very pervasive…as a result, and despite the use of cobalt (an expensive material), it bears the lowest cost per unit of energy with consumer batteries being priced near $0.50 /Ah, or equivalently, $130/kWh. LCO offers very good energy density and a cycle life often ranging between 500 and 1,500 cycles. From a material standpoint, LCO can potentially catch fire or explode especially if the battery is improperly designed or operated. That was the primary reason for the battery recalls that were frequent some 10 years ago. Proper battery design and safety electronics circuitry have greatly improved the situation and made LCO batteries far safer.

NCA came to prominence with Tesla’s use of the Panasonic 18650 cells in their model S (and the earlier Roadster). It has exceptional energy density — which translates directly to more miles of driving per charge. But NCA has a limited cycle life, often less than 500 cycles. Historically NCA was expensive because of its use of cobalt and limited manufacturing volume. This is rapidly changing with Tesla’s growing volume and the Gigafactory coming online in 2017. It is widely rumored that Tesla’s cost is at or near the figures for LCO, i.e., near $100/kWh at the cell level. It remains to be seen whether Panasonic will replicate these costs for the general market.

NCM sits between LCO and NCA. It has good energy density, better cycle life than NCA (in the range of 1,000 to 2,000 cycles) and is considered inherently less prone to safety hazards than LCO. Its historical usage was in power tools but it has become recently a serious candidate material for automotive applications. In principal, NCM cathodes should be less expensive to manufacture owing to their use of manganese, quite an inexpensive material. The two Korean conglomerates, LG Chem and Samsung SDI, are major advocates and manufacturers of NCM-based batteries.

One of the oldest used cathode materials is LMNO, or sometimes referred to as LMO. The Nissan Leaf battery uses LMNO cathodes. It is safe, reliable with long cycle life, and is relatively inexpensive to manufacture. But it suffers from low energy density especially relative to NCA. If you ever wondered why the Tesla has a far better driving range than the Leaf, the choice of cathode materials is an important part of your answer. It is not widely used outside of Japan.

Finally, we come to lithium iron phosphate, or LFP. Initially invented in North America in the 1990s, it has developed a strong manufacturing base today in China, with the Chinese government extending it significant economic incentives to make China a manufacturing powerhouse for LFP-batteries. LFP has exceptional cycle life, often exceeding 3,000 cycles, and is considered very safe. A major shortcoming of LFP is its reduced energy density: about one third that of LCO, NCA or NCM. It, in principle, should be inexpensive to manufacture. After all, iron and phosphorus are two inexpensive materials. But reality suggests otherwise: the lower energy density requires the use of twice or three times as many cells to build a battery pack with the same capacity as LCO or NCA. As a result, LFP-based batteries cost today 2 or 3x more than equivalent LCO-based battery packs.

By now, you are probably scratching your head and asking: so which one wins? and that is precisely the conundrum for energy storage and to some extent, electric vehicles. Let’s drill deeper.

Energy storage applications pose a few key requirements on the battery: 1) the battery should last 10 years with daily charge and discharge, or in other words, has a cycle life specification of 3,500 cycles or more; 2) it has to be immensely cost-effective, measured both in its upfront capital cost and cost of ownership; in other words, the total cost of owning and operating it over its 10-year life; and 3) it has to be safe.

The first and third requirements are straightforward: they make LFP and NCM favorites. LFP inherently has long cycle life, and NCM, if charged only to about 80% of its maximum capacity also can offer a very long cycle life. So if you wondered why Tesla quietly dropped its 10-kWh PowerWall product, it is because it is made with NCA cathodes and cannot meet the very long cycle life requirement of daily charging.

The second requirement gets tricky. Right now, neither LFP nor NCM are sufficiently inexpensive to make a very compelling economic case to operators of energy storage systems (ESS) — setting government incentives aside. So the question boils down to which one of them will have a steeper cost reduction curve over time. Such a question naturally creates two camps of followers, each arguing their respective case.

Notice that high energy density does not factor in these requirements, at least not directly. Unlike consumer devices or electric vehicles, ESS seldom have a volume or weight restriction and thus, in principle, can accommodate batteries with lower energy density. The problem, however, is that batteries with lower energy density do not necessarily correspond to lower cost per unit of energy. It actually costs more to manufacture a 3Ah battery using LFP than it does using NCA. This makes energy density a critical factor in the math. Lower energy density equals more needed batteries to assemble a bigger battery pack, and thus more cost. For now, in the battle between LFP and NCM, the jury is still out though my personal opinion is that NCM, by virtue of its higher energy density, has an advantage. On the other hand, China’s uninhibited support for LFP can potentially tip the scale. More later.

Before I adjourn, I would like to rebuke an oft-made statement by some builders of ESS: that they are “battery agnostic.” To them, batteries are a commodity that can be easily interchanged among vendors and suppliers, much like commodity components in a consumer electronic product. I am hoping that the reader gleans from this post the great number of subtleties and complexities involved in the choice of the proper battery in an ESS. The notion of battery-agnostic in this space is utterly misplaced and only points to the illiteracy of the engineers building these ESS. If the battery fires on the 787 Dreamliner can permanently remind us of one lesson, it should be to never underestimate the consequences of neglecting the complexities of the battery. They can be very severe and immensely costly. Battery-agnostic is battery-illiterate.

I explained in this previous post how energy storage can be beneficial in the configuration of a modern electrical grid that encourages multiple forms of clean energy. Today’s post takes this explanation one step further and covers a few of the fundamental concepts that are being explored across this nascent and growing segment.

First, let’s explore in an oversimplified drawing the present structure of the electrical grid. Transmission and distribution networks (that’s the power lines and substations that are scattered throughout the country) connect power generating plants, coal-fired, gas-fired, nuclear, hydroelectric,…etc. to the end user, be it residential communities or commercial and industrial (C&I) complexes. That has been the case for many decades. Utilities historically have managed the entire system but with regulatory supervision at the state and federal levels in the US.

Solar panels, wind farms and other types of generating sources are now widely available, with many states, for example California, actively promoting such “distributed” generation sources. Distributed means not centrally located and owned by different entities; think for example the millions of solar panels on rooftops. With this new evolving grid structure, managing the demand and supply, i.e. balancing generation and consumption, becomes now a more complex task, with the “duck curve” that I introduced in the previous post being one manifestation of this complexity….hence energy storage to decouple the demand from the supply, where, for the time being, I will use the term “energy storage” loosely to represent all systems that are capable of “storing” energy, not necessarily electrical energy only, but energy in multiple forms.

In one simplified grid configuration, the energy storage system sits at the utility-level, i.e. supporting the generating plants of the electrical utility, and are thus positioned, owned and managed by the utility itself. For example, the utility may choose to pump water back up the dam to “store” this energy, or it may choose to have a very large battery, but in either case, the power levels involved here are large, very large, measured in several MW to hundreds of MW. Examining the “duck curve” in the previous post shows that between the hours of 3pm and 9pm, utilities in California have to ramp up new additional power on the order of 13,000 MW over 3 hours. This is what utility-scale means.

By virtue of the fact that these systems sit long before the meter, such a configuration is also called “in-front of the meter.” In other words, the responsibility for this system belongs to the utility or some other intermediate agency, but does not belong to the end user, be it a residence or a C&I entity.

Now let’s examine yet an alternative grid configuration, once again keeping in mind the oversimplification needed for clarity purposes. In this case, the energy storage is “distributed.” In other words, these energy storage systems are now much smaller in capacity, perhaps a fews tens of kWs to hundreds of kWs, but geographically distributed and located closer to the end-user facilities, and most likely owned and managed by diverse entities. If these smaller distributed energy storage systems sit before the meter, then, you guessed right, are called “in-front of the meter” and are not the responsibility of the end-user. But this distributed configuration is also amenable to another arrangement where the energy storage system sits “behind the meter” and is now the responsibility of the end-user, be it a residence or a C&I entity.

In the former case, i.e. in front of the meter, the economic benefit is derived by the organization that owns and manages the energy storage system, perhaps a utility or an intermediate agency. However, in the latter case of behind-the-meter, the end-user derives the economic benefit of owning and operating the energy storage system. In other words, depending on where the energy storage system is placed, i.e., at the utility scale, in front or behind the meter, there are different economic drivers and most certainly, different economic beneficiaries. This naturally creates an evolving landscape where different companies, organizations, agencies are trying to stake claims where conflicts, present and future, are only emerging, yet all of it under the watchful eyes of various regulatory bodies that are trying to adapt to new technologies and many incoming players.

For the case of utility-scale, the beneficiary is more often than not the utility itself that needs to redefine its role in the future grid. In the case of behind-the-meter, the beneficiary might be the residence owner; for example, the resident may purchase a Tesla PowerWall to play the arbitrage between daytime and nighttime pricing of electricity — though I doubt this business model makes a lot of sense. It also might be a small industrial complex that wants to limit its peak power usage (its maximum wattage demand) and reduce the peak demand fees it pays its local utility. Hopefully, by now you are beginning to see the diverse and complex economic factors that are coming into play including fundamental questions on future business models.

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About the author

Nadim Maluf

I am a consumer. I am an engineer. I innovate. I am inspired by others. I am a student. I am a teacher. I am a CEO. I admire great people who make great products. And I love it best when I make a difference in the lives of others.